BUSI 422 Read & Interact Brueggeman & Fisher Chapter 21 solutions complete answers

BUSI 422 Read & Interact Brueggeman & Fisher Chapter 21 solutions complete answers

 

FFO stands for:

 

The straight lining of rents does not distort the financial analysis of ______.

 

REITs obtain the majority of their funds to acquire additional real estate assets through all of the following except:

 

Real estate values tend to rise and fall over time based more on   conditions than   conditions.

 

A _____ REIT reinvests any sale and financing proceeds in new or existing properties.

 

For REITS, earnings per share are not the best measure of cash flow due to:

 

Additional risk to investments in unlisted REITs exists because of ______ provisions that may force the company to liquidate at a very disadvantageous point in time.

 

True or false: Capital gains from the sale of property must be distributed as a dividend to shareholders.

 

Which of the following are problems with using sales per square foot based on mall store tenants that reported 12 months of sales for the operating period? Select all that apply.

 

The Gordon dividend discount model _______.

 

Income before interest or depreciation deductions is referred to as:

 

One of the challenges with analyzing retail REITs is that:

 

Mortgage REITs are ______ banks.

 

It is ______ to run a REIT when compared to a private company.

 

True or false: Upon expiration of a ground lease, the landowner has rights to the land improvements, but not structures or buildings on the land.

 

The amount of leased space is ______.

 

Which type of debt is favorable in the near term, but exposes REITs to significantly greater risk?

 

When a REIT takes the risk of collected rents from the building owner and pays a lower payment to the landowner it is know as:

 

Lease rollover risk is greatest for REITs that own ______.

 

NAREIT classifies ____ types of private REITs.

 

Taxable REIT subsidiaries help ______.

 

The straight lining of rents can distort the financial analysis of ______.

 

Deferred leasing costs may be overlooked by investors because:

 

True or false: Most REITs amortize their debt.

 

REITs that are not listed on an exchange or traded over-the-counter are called:

 

Investors should be aware of any fee based on other sources of income that a REIT reports because:

 

The page of a REIT's prospectus dealing with the projected FFO has become known as the _____.

 

True or false: All REITs must be publicly traded.

 

Which of the following is not a type of REIT?

 

____ is used by analysts and investors as a measure of the cash flow available to the REIT for distributions to shareholders.

 

Which of the following is not classified by NAREIT as a type of private REIT?

 

Which type of REIT is undertaken with the goal of disposing of its assets and distributing all proceeds to shareholders by a specific date?

 

The dominant REIT today, by both number and market capitalization figures, is the:

 

RMA provides for an excise tax of ____ percent on any transaction between a TRS and its affiliated REIT not negotiated as an arm's-length transaction.

 

If an entity fails to qualify as a REIT, the entity cannot make a new election ot be taxed as a REIT until   years after the termination date. Enter your answer numerically.

 

Which of the following is not a property type NAREIT divides equity REITS into?

 

Which of the following type of REIT is essentially a creditor?

 

REITs allow investors to build       

 

In regards to REITs, at least 95 percent of the entity’s        income must be derived from dividends, interest, rents or gains from the sale of certain assets.

 

A REIT sold a property after owning it for one year. This is an example of a(n):

 

Which of the following offerings launched the UPREIT?

 

A REIT is required to use a         year asset life when determining income available for dividends. Enter your answer numerically.

 

True or false: It is possible for the IRS to impose monetary penalties in lieu of loss of REIT status for certain violations.

 

Which of the following acts contain provisions designed to allow REITs to compete more effectively with other owners of commercial real estate?

 

A REIT is a:

 

Select all that apply. REITs:

 

Select all that apply. In order to pass the safe harbor tests:

 

The vast majority of REITs today are:

 

At least        percent of the value of a REIT’s assets must consist of real estate assets, cash and government securities. Type your answer in numeric form.

 

In order to pass the safe harbor tests, a REIT’s distributions to shareholders must equal or exceed the sum of        percent of REIT taxable income. Enter your answer in numeric form.

 

True or false: REITS must outsource management functions and sales to third parties.

 

True or false: A REIT sold an apartment building (not purchased through foreclosure) after holding it for income production for 4.5 years. This sale would pass the safe harbor test.

 

An UPREIT is a REIT that:

 

In which of the following ways can individuals become investors in REITs?

 

REITs can grow income in an existing portfolio in which of the following ways? Select all that apply.

 

Consider the following situation. A retail tenant signs a 10 year lease. Rent will be $10 in years 1 through 3, $12 in years 4 through 6 and $14 in years 7 through 10. Assume revenue recognition is based on straight-line reporting. Which of the following are issues that arise due to the use of straight-line reporting? Select all that apply.

 

Real estate value tend to rise and fall over time based more on        conditions than       conditions.

 

If a REIT owns buildings subject to a ground lease owned by another party they are using the equivalence of leverage if the ground-lease payments are       .

 

Select all that apply. REITs can hedge risk associated with the use of short-term floating rate debt through the use of:

 

A more inclusive definition of sales per square foot may tend to        the long-term sales potential of a mall.

 

Which of the following types of REIT is essentially a creditor?

 

True or false: All REITs specialize by property type.

 

Cash flows from tenant improvements        included in FFO calculations.

 

When a REIT is trading        NAV, it is more likely to find attractive spreads than when it is trading        NAV.

 

       space quantifies the space for which tenants are now paying rent while        space includes all space for which leases are signed.

 

Select all that apply. Which of the following financial relationships must be understood when analyzing equity REITs?

 

The Sarbanes-Oxley law of 2002 had what effect on REITs? Select all that apply.

 

Unlisted REITs typically sell subscriptions of shares through financial planners to investors at a        price.

 

Select all that apply. Which of the following is/are true regarding the Gordon Dividend Discount Model?

 

It is important for investors to examine expected lease rollovers because:

 

When using the Income (FFO) Model, it is most common to use        to estimate income for valuation.

 

True or false: Leasing commissions are included in depreciation and amortization expense.

 

Investors should be aware of any feed based on other sources of income that a REIT reports because:

 

Cash available for distribution provides a        conservative estimate of the potential stream of income available for dividend purposes.

 

The hybrid REIT classification existed prior to        (2010/2014). Enter your answer in numeric format.

 

Select all that apply. Which of the following are issues/concerns that investors should be aware of when investing in mortgage REITs?

 

In order to assess relative risk, it is important to determine how        an individual REIT is in comparison to other REITs.

 

Which of the following is true regarding equity REITs? Select all that apply.

 

Ground leases tend to be         leases.

 

True or false: Risk would be lower for a speculative development than with a build-to-suit development.

 

True or false: REITs may receive through provision of services to unrelated third parties.

 

Net Asset Value is an indication of:

 

True or false: One of the benefits of investing in equity REITs is that there is no potential for conflicts of interest.

 

All of the following are ways in which REITs can grow income and increase funds from operations except:

 

Mortgage REITs differ from equity REITs in that:

 

Suppose tenant improvement costs averaged $9 per square foot of newly leased space for the preceding 4 years. The company is preparing for an IPO and spent $19 per square foot in the previous year. What does this suggest?

 

The average of the capitalization rates that would be used for individual properties in a portfolio if the properties were being valued separately is known as the:

 

Estimating income then multiplying it by an appropriate multiple of income or price-to-earnings ratio is used in which of the following valuation models?

 

Magnifying funds from operations often results in        stock prices.

 

It is possible for a REIT to enter into an agreement with a joint venture. When they do this, they often provide which of the following?

 

Free rent or improvements provided by REIT management are likely to be used when:

 

The difference between the total current value of real estate and other assets owned by a REIT and the total debt and liabilities owed by the REIT is used in which valuation method?

 

REITs have very little        cash flow.

 

Investors should pay attention to any notes to FFO estimates that include “signed leases scheduled to commence” because: